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Tokenizing Agricultural Futures in Blockchain: New Business Opportunities for Small and Medium-sized Enterprises

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Listed:
  • Deyan Paroushev

    (Sofia University St. Kliment Ohridski, Sofia, Bulgaria)

  • Petko Ruskov

    (Sofia University St. Kliment Ohridski, Sofia, Bulgaria)

Abstract

Small and medium-sized enterprises (SMEs) in the agricultural sector are often excluded from institutional futures trading markets due to minimum volume requirements and complex access procedures. This study presents an innovative tokenization model that enables SMEs to collectively participate in futures trading by pooling smaller quantities into standard contracts. Using blockchain technology, the model creates a transparent system for aggregating small volumes into standard futures contracts. Results indicate significant risk reduction for SMEs and improved access to risk management tools. Economic analysis reveals potential revenue increases of 8-10% through elimination of intermediaries and direct futures market access. This approach has the potential to transform SME participation in global agricultural commodity trading.

Suggested Citation

  • Deyan Paroushev & Petko Ruskov, 2024. "Tokenizing Agricultural Futures in Blockchain: New Business Opportunities for Small and Medium-sized Enterprises," Innovative Information Technologies for Economy Digitalization (IITED), University of National and World Economy, Sofia, Bulgaria, issue 1, pages 61-69, October.
    • Handle: RePEc:nwe:iitfed:y:2024:i:1:p:61-69
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    References listed on IDEAS

    as
    1. Malni Kumarathunga & Rodrigo N. Calheiros & Athula Ginige, 2022. "Smart Agricultural Futures Market: Blockchain Technology as a Trust Enabler between Smallholder Farmers and Buyers," Sustainability, MDPI, vol. 14(5), pages 1-20, March.
    2. Ambler, Kate & de Brauw, Alan & Herskowitz, Sylvan & Pulido, Cristhian, 2023. "Viewpoint: Finance needs of the agricultural midstream," Food Policy, Elsevier, vol. 121(C).
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